Mario Gabelli recently announced 1st-half performance of his Utility Fund, GABUX, and accompanied it with the usual unaudited schedule of Investments as of June 30, 2011. Assets under management for the fund are $2.185 billion. Comparing the schedule reported on 3/31 and the recent schedule of 6/30 reveals some interesting additions to the diverse portfolio of about 210 positions in the fund.

Rhodia SA (OTC:RHAYY), position worth $7.3 million. The position in Rhodia, a French specialty chemical manufacturer, will be short-lived, as on June 30 the company accepted an all-cash acquisition offer.

Trinity (NYSE:TRN), position worth $3.1 million. Trinity is a rail car, highway accessories, and wind tower manufacturer, and operates a large rail car leasing operation as a joint venture.

Apache (NYSE:APA), position worth $1.3 million. Apache is an international Oil & Gas exploration and production firm.

Gabelli doubled the position in Tullow Oil plc (OTCPK:TUWLF) to $2.0 million. Tullow is an Oil & Gas E&P firm headquartered in London with reserves in Ghana. Mueller Industries' (NYSE:MWA) share count also doubled and is now worth $2.2 million. Mueller is a water infrastructure and valve component manufacturer.

While there were no significant new utility positions initiated for the quarter, there were several significant additions to existing investments. The biggest is an increase in electric power merchant AES (NYSE:AES) from 1.1 million shares worth $14.3 million to 2.5 million shares worth $31.7 million. AES is a mixture of regulated electric utilities in Ohio and Indiana along with international utilities and merchant power assets. Also in the electric industry, the fund almost doubled its position in Florida-based TECO Energy (NYSE:TE) and holds $9.5 million worth of shares.

In the natural gas industry, the fund bought an additional 120,000 shares of Southwest Gas (NYSE:SWX) and owns 866,000 shares worth $33.2 million. Management added 500,000 shares of El Paso Corp (EP) for a position worth $30.0 million and increased its position in Southern Union (NYSE:SUG) to $48 million. SUG has accepted an acquisition offer at $44.50 per share.

In the telecommunications industry, the fund increased its holding of satellite and space system manufacturer Loral Space and Communications (NASDAQ:LORL) from $1.6 million to $6.7 million. During the quarter, the fund initiated an $8.1 million position in cable provider Charter Communications (NASDAQ:CHTR).

It may be noteworthy that there were no substantial investments in the Global Utility section, and the percentage of assets declined to 3.0% of NAV from 3.7% in the first quarter.

There were two intriguing moves during the quarter. The first is a growing cash position. While the fund is known for maintaining a high level of cash, investments in short-term US Government Obligations rose from $297 million in the first qtr to $372 million in the second and represents 17.0% of assets, up from 16.1%. The average cash position during the past few years has been around 13% to 14%.

The second is a growing position in a very small natural gas utility in upstate New York, Corning Natural Gas (OTCQX:CNIG). The fund currently owns 16% of the utility. The company carries a market cap of $30 million with $14 million in net debt, and insiders own 66% of the shares. Mr. Richard Osborne and Gas Natural (NYSEMKT:EGAS) attempted to purchase CNIG in 2008, and again in 2009, but found no interest. Subsequently, Osborne sold all his and EGAS’ shares.

Just before the acquisition offer, Osborne had been the chairman of the board of CNIG in addition to his duties at EGAS. It is intriguing Gabelli has taken a relatively large position in this mini cap company. One of the primary focuses of the fund is locating mid and small cap utility companies that are potential acquisition candidates, and it would seem CNIG may quality. CNIG has very limited liquidity and has a 90-day trading average of less than 300 shares per day.

Gabelli is known as a value buyer, and these companies offer a specific attraction to the fund manager. For instance, the higher exposure to AES could be explained either from its merchant power exposure and an anticipated fundamental improvement in the industry, or from its growing regulated utility business that should add stability to earnings and cash flow.

It is important to appreciate the focus of these investments by Gabelli: Value, industry consolidation, and underlying industry trends are important factors in his selection, not necessarily dividend or dividend growth.

If an investor is looking for new ideas within these specific industries, following Gabelli’s lead may be worth the time for further due diligence.

As always, investors should conduct their own due diligence, should develop their own understanding of these potential opportunities, and should determine how it may fit their current financial situation.